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Collecting Credit Information
How do they do it, where do they get it
Credit bureaus, also known as "Consumer
Reporting Agencies" get their information about us from their subscribers, who are
usually credit grantors. They include finance companies, banks, credit card companies,
retailers and even insurance companies.
Credit grantors are almost always subscribers of some
credit bureau, either local or national. Information is also collected from other sources
like public records, collection agencies and even from the consumer.
SUBSCRIBERS
Whenever you finance
a purchase, apply for a bank loan, or fill out just about any kind of credit application,
the information that you enter on the application is checked against the information the
credit bureau has in your file.
When a subscriber logs into
a bureau computer to pull a credit report, they are required to supply address, employer
and other pertinent data before the report will be created. Your credit file is then
updated with any new information you may have provided. If you moved recently, married or
changed jobs, then applied for credit or even rental housing, your file at the bureau
would be updated with this new information.
Typically, the creditor's
computer contacts the credit bureau or bureaus they subscribe to by modem and obtains a
copy of a report in a matter of moments. In addition to birth date, address and employer,
the report will disclose your history of making prompt payments on other accounts or if
you are chronically late. They will see accounts have been charged off and if there are
collection accounts that remain unpaid. A scoring system is often used to determine
whether or not to extend you credit.
Once credit is issued, the creditor usually reports your
payments to the bureau regularly and they too become part of your report. In fact,
subscriber contracts often require credit grantors to supply data files on all of their
credit accounts to the bureau monthly.
PUBLIC RECORDS
Credit bureaus also get
information from public records. Records in the county clerk or recorder's office are
public information and available to interested parties. The bureau sends a clerk or
contractor to search the records for information on judgments, liens, dismissals,
discharges, garnishments, foreclosures, notices of default, divorces, bankruptcies and
other pertinent information to add to their files.
The work is still
generally done manually by clerks with little or no training, so you can imagine how easy
it is for the information they gather to contain errors or be incomplete. The most likely
errors are incorrect dollar amounts, case numbers, defendant's names and dates. Court
records do not normally contain social security numbers or birth dates, so common names
can cause major accuracy problems.
COLLECTION AGENCIES
Another source of
information for consumer reporting companies is collection agencies. These agencies are
more than willing to trade information with the bureaus because they have one thing in
mind; finding creditors and collecting on bad debts.
The updated information a bureau gets from new landlords or
credit grantors can often assist them in their skip tracing efforts.
ADDING YOUR OWN
INFORMATION
A credit
bureau can also get positive information about you from a non-subscribing creditor, at
your request.
Most of us have some good credit with creditors who do not
subscribe to any credit-reporting agency. If you can show regular payments were made, or
are being made promptly to any creditor, you can have that payment record added to your
credit file.
An example of a non- subscribing creditor might be a
private mortgage holder or land contract vendor.
Other non-subscribing creditors might include private party
car or boat loans, retailers that handle their own financing, local Lumberyards, loans
against stocks and bonds, insurance policy, pension fund and employee loans.
Even if a credit file
does not contain negative information, it will always help to show regular monthly
payments or to a creditor who has extended credit in the past. This is particularly
important to young people who cannot get credit from traditional sources until someone
helps them establish a credit history.
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